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Major consideration for valuations of your health care business

On behalf of Rivas Goldstein, LLP posted in blog on Thursday, January 25, 2018.

After you decide to sell your health care business, you must, of course, have some idea of its value to attract buyers. However, five people could scrutinize your business and come up with five quite different estimates. In part, the estimate depends on the person's relationship to the business. For example, someone such as you who may have invested years and many emotions into the business might come up with a higher price than a more neutral third party would.

On the other hand, this neutral third party might not recognize just how much value your practice's non-tangible assets bring, such as the doctors or nurses' skill and reputation. It could be that your assessment is closer to the mark. So, what is a good way to determine the value of your business? Here is a big consideration.

How many financial documents you have to back up the valuation

One of the top things to keep in mind is that you must have ways to back up and justify your valuation. For example, if your plan is to keep the staff working under the new buyer and to keep the website up, then having that workforce and marketing efforts in place and ready to go is a tremendous boon for the right buyer. You can use data from your marketing efforts that measure how many patients they bring in and, as for the workforce, remember components such as the education and training you may have invested in certain staffers and the financial value of that. To measure the strength of your practice's reputation, one way is to point to online reviews and those of comparable practices to show that yours are better or equivalent and then use documentation to show the financial worth of each review.

If all you really have is little more than a statement like, "I have a trained staff and a good website ready to go," then that does not really back up the price tag you have placed on the business.

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